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Russian firms, leaders hit with new U.S. sanctions

By Kathleen Hennessey and Paul RichterChicago Tribune

Posted:
04/28/2014 12:01:00 AM CDT

Updated:
04/28/2014 11:51:17 PM CDT

WASHINGTON -- Trying to drive a wedge between Vladimir Putin and the oligarchs who support him, the Obama administration slapped sanctions Monday on another two dozen Russian financiers, government officials and companies in an effort to pressure the Russian president to back down in Ukraine.

"These sanctions represent the next stage in a calibrated effort to change Russia's behavior," President Barack Obama said during a news conference in Manila, Philippines, where he is wrapping up a weeklong tour of Asia. "We don't yet know whether it's going to work. ... But we are keeping in reserve additional steps that we could take should the situation escalate further."

The new U.S. list targets seven Russians, including two members of Putin's inner circle, for travel bans and asset freezes. It also includes 17 companies, including oil and infrastructure firms, with close ties to Putin, according to the White House.

The Commerce Department said it would deny or revoke export licenses held by several Russian companies that export high-tech defense equipment.

The European Union agreed to roll out related sanctions Tuesday, but will move more cautiously than Washington. The EU, which is much more closely tied than the U.S.

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to Russia's energy and industrial sectors, is expected to name 15 Russians and pro-Russia Ukrainian leaders, but not go after any companies.

The U.S. and Europe now have imposed sanctions on close to 100 Russians and Ukrainians, including several billionaires and business executives close to Putin, as well as several banks and companies.

Critics lambasted the list as insufficient to deter Putin. Some Republicans argued that the administration should go after more prominent Russian banks and companies, such as the energy giant Gazprom.

Sen. Kelly Ayotte, R-N.H., described the sanctions as "tepid, incremental."

Cliff Kupchan, an analyst with the Eurasia Group risk-consulting firm, said the 17 companies targeted are not large enough to create much impact. "This won't hurt the Russian economy," he said.

U.S. and European officials have not agreed on how far to go, or how quickly. Some diplomats say that overly harsh sanctions could backfire, hurting European economies in particular, without changing Putin's course.

In Kharkiv, Ukraine's second-largest city, Mayor Hennady Kernes was shot in the back Monday morning while cycling on the outskirts of the city, his office said. He underwent surgery and was reported by the hospital to be in "grave but stable" condition.

Officials have not commented on who could be behind the attack on the mayor -- but Kernes was a man who could have angered both sides.

Kernes' friend and former Kharkiv governor, Mykhailo Dobkin, told journalists the attackers had aimed at Kernes' heart and wanted to kill him to destabilize the city

"If you want to know my opinion, they were shooting not at Kernes, but at Kharkiv," he said.

Dobkin is among several candidates running in Ukraine's May 25 presidential election, which the interim government says Russia is trying to derail.

Kernes was a staunch opponent of the pro-West Maidan movement that toppled President Viktor Yanukovych in February and was widely viewed as the organizer who sent activists from eastern Ukraine to harass demonstrators in Kiev.

But he has softened his stance toward the new Kiev government. At a meeting of eastern Ukrainian leaders and acting Prime Minister Arseniy Yatsenyuk earlier this month, Kernes insisted he does not support the armed pro-Russia insurgents and backed a united Ukraine.

Kharkiv is in eastern Ukraine, where pro-Russia gunmen have seized government buildings and police stations and set up roadblocks to demand greater autonomy or even annexation by Russia. But unlike the neighboring Donetsk region, Kharkiv had been largely unaffected by the insurgency -- something Kernes has been credited with. Its administration building was briefly seized earlier this month but promptly cleared of pro-Russia protesters.

The Russian Foreign Ministry said the attack on Kernes, along with other events, "indicates that it isn't possible to speak of any 'peaceful' pre-election campaign in Ukraine."